Tag: warrants

3 August 2018 – El Español

Félix Abánades, President and largest shareholder of the listed real estate company Quabit, is continuing to immerse himself in a quagmire of capital increases that he has been promoting in order to raise funds to use to purchase land, on which to build almost 8,000 homes between now and 2022. His ambitious objective is to invoice almost €2 billion, generate a cash flow of almost €500 million and distribute €90 million in dividends.

Land in exchange for shares

Basically, these increases have been of a non-monetary nature, with the purchase of land in exchange for shares in Quabit. A much cheaper route than the two lines of credit amounting to €100 million that the firm signed with the fund Avenue between December 2016 and December 2017.

Those loans carry a clear risk, given that the principal, on which interest of between 12% and 16% is charged, must be repaid within a maximum term of 4 years following the drawdown date.

Repayment commitment

In light of the probability that the principal will not be returned on time, Avenue forced Quabit to issue warrants, an abusive right over the shares in favour of the fund that, in the worst case, would see it take ownership of 8.56% of the property developer.

For the time being, with Quabit trading at €1.77, at the close of business on Thursday, that option would be ruled out, given that the subscription prices agreed with Avenue for the execution of those rights over the shares range between €3.07 and €3.75.

Six capital increases in one fell swoop

It is for that reason that, in light of this negative outlook, Abánades carried out six capital increases in one fell swoop last November, for a combined total of €41.8 million, with the issue of shares at a price of €2, with a nominal value of €0.50 and a premium of €1.50.

All of those increases were of a non-monetary nature, in which Abánades captured estates from the Basque property developer Ondabide in Mijas (Málaga) and plots in Guadalajara contributed by Rayet, Abánades’s own company. The other four capital increases were placed by the President of Quabit with the Malaga-based property developer, Sankar Real Estate.

Agreement with Sankar

Quabit’s agreement with Sankar, for the subscription of those four increases, was aimed at obtaining plots in the Malagan municipalities of Mijas, Marbella and Estepona and in the Menorcan town of Mercadal, some in the form of proindivisos for 30% of the surface area.

The total operation will allow Sankar to acquire 4.55% of Quabit’s share capital, once the four increases have been fully subscribed. A package of 6.78 million shares, valued initially at an issue price of €13.56 million.

For the time being, Sankar has subscribed to two of these increases. With the public deed of the capital increase of the latter, relating to estates on the island of Menorca, the Malaga-based property developer has been obliged to report to Spain’s National Securities and Exchange Commission (CNMV) its stake as a reference shareholder of Quabit, given that it now owns 3% of the shares. Specifically, its stake amounts to 3.31%.

Losses of 12%

A package of 4.93 million shares that have accumulated losses of 12% compared with the €2 price for which they were issued, taking as a reference Quabit’s COB trading price on Thursday, €1.77.

The consequence of these non-monetary increases is affecting the personal stake of Félix Abánades, the President of Quabit, who has seen his position in the company decrease from 24% just a few months ago to the current level of 21.4%. He is trying to maintain the rate with the acquisition of financial instruments that, in the future, may yield another 1% of share capital.

Original story: El Español (by Juan Carlos Martínez)

Translation: Carmel Drake